The U.S. Department of Justice on Thursday ordered Germany's Commerzbank bank and its U.S. affiliates to pay $1.45 billion in penalties for violations of U.S. sanctions law and for a multibillion-dollar securities fraud.
A department statement said Commerzbank, Germany's second-largest bank, admitted and accepted responsibility for its criminal conduct in violations of the International Emergency Economic Powers Act and the Bank Secrecy Act.
It said Commerzbank admitted that it "knowingly and willfully" moved $263 million through the U.S. financial system on behalf of Iranian and Sudanese businesses, which are sanctioned from doing business in the U.S.
The bank also admitted that it had concealed and removed the involvement of sanctioned businesses from payment messages and transactions with its New York branch and other U.S. financial institutions.
"Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan," said U.S. Attorney Ronald Machen. "Today’s resolution demonstrates that there will be consequences when global banks try to profit from the benefits of the U.S. financial system without respecting our laws."
Separately, in the case of accounting fraud, Commerzbank loaned money to off-balance-sheet entities created by Japanese-based manufacturer Olympus to disguise losses. The Justice Department said Commerzbank transacted more than $1.6 billion through its New York branch to further the fraud, violating the Bank Secrecy Act by failing to detect and report suspicious activity.
As part of the agreement, Commerzbank will pay a $79 million fine and forfeit $563 million to the Justice Department, $200 million to the Federal Reserve and $610 million to New York state.
Commerzbank said in a statement that it would set aside an additional $358 million to make settlements related to the case.
The bank said it would continue to make changes to its systems, training and personnel to address the deficiencies identified by U.S. and New York authorities.